Summary of Conference Call on Greater China Semiconductors Company and Industry Overview - **Company**: Aspeed Technology (5274.TWO) - **Industry**: Greater China Semiconductors, specifically focusing on cloud semiconductors and non-GPU servers Key Points and Arguments 1. **General Server Demand**: General server shipments are projected to exceed a teens percentage year-over-year (Y/Y) growth, driven by strong demand from US hyperscalers. The forecast for 2025 indicates a 14% Y/Y growth, with similar or stronger demand expected in 2026 [2][4][5] 2. **TPU Adoption**: The next-generation Tensor Processing Unit (TPU) is expected to adopt Aspeed's baseboard management controller (BMC), which could open a new total addressable market (TAM) for the company [4][5] 3. **E-glass Utilization**: Aspeed is qualifying E-glass as a second source to mitigate the shortage of T-glass, which is critical for BMC production. This is expected to unlock BMC supply in the first half of 2026, with potential monthly shipments exceeding 2 million units [3][5] 4. **Backlog and Revenue Growth**: Aspeed's backlog extends into 2027, indicating strong demand. The company is expected to maintain a significant market share in AI servers, with revenue contributions from AI ASIC servers projected to increase by 11% in 2027 [4][12] 5. **Price Target Increase**: The price target for Aspeed has been raised to NT$9,999, reflecting a bullish outlook on cloud semiconductors and peripherals. The stock is currently trading at 43 times the estimated earnings per share (EPS) for 2026, with an expected EPS growth of 67% [5][49] 6. **Financial Projections**: Revenue estimates for Aspeed have been increased by 8% for 2026 and 15% for 2027, driven by higher BMC and BIC shipment forecasts due to strong server demand [46][49] Additional Important Insights 1. **Market Dynamics**: The demand for compute and storage servers is expected to support AI workload off-loading, with a potential for another teens percentage increase in shipments in 2026 [2][5] 2. **Competitive Landscape**: Aspeed maintains a strong position in AI servers, with significant partnerships with major players like NVIDIA and Google. The introduction of new architectures by NVIDIA is anticipated to expand the TAM for Aspeed's BMC [4][12] 3. **Long-term Growth**: The company is well-positioned for growth from 2026 to 2028, as it gradually secures more substrate supply and expands its product offerings [5][49] This summary encapsulates the critical insights from the conference call, highlighting the growth potential and strategic positioning of Aspeed Technology within the semiconductor industry.

Investment Rating - The report maintains an Overweight (OW) rating on Aspeed Technology and Montage Technology, with a price target for Aspeed raised to NT$6,100 [6][38][45]. Core Insights - The outlook for cloud semiconductors is improving, particularly with the anticipated mass production of key components for Rubin architecture starting in Q2 2026, which is expected to enhance growth in the sector [3][10]. - ASIC servers are projected to see significant growth, with estimates suggesting that ASIC BMC could account for 5-10% of global shipments in 2026, driven by lower upfront costs and increased demand from major cloud service providers [4][10]. - Demand for storage servers has strengthened since Q4 2024, particularly from top cloud service providers in the US and China, indicating a robust market environment [4][10]. Summary by Sections Market Outlook - The 2026 GPU server outlook is becoming clearer, with increased supply chain engagement for Rubin racks and a potential mix of architectures that could mitigate supply chain risks [3][10]. - The report highlights a positive near-term outlook for non-rack servers and anticipates continued growth in cloud capital expenditures, with a projected 43% year-over-year growth in 2025 [20][21]. Company Performance - Aspeed reported June revenue of NT$782 million, with Q2 revenue reaching NT$2.2 billion, exceeding company guidance by 15% [6][29]. - Earnings estimates for Aspeed have been revised upward by 6%, 6%, and 10% for 2025, 2026, and 2027, respectively, reflecting higher BMC shipment forecasts and increased demand for IO expanders [29][32]. Financial Projections - The report projects total revenues for Aspeed to reach NT$8.410 billion in 2025, NT$10.060 billion in 2026, and NT$12.983 billion in 2027, with significant year-over-year growth rates [54]. - The gross margin for Aspeed is expected to improve to 66% in 2025, with operating income projected to increase to NT$4.200 billion [54][55]. Valuation Methodology - The price target increase for Aspeed from NT$5,000 to NT$6,100 is based on higher EPS estimates and an increased growth rate assumption from 17.2% to 18.5% [32][38]. - The new price target implies a forward P/E ratio of 51x for 2026, which is considered justifiable given the improving demand dynamics in the market [32][40].